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#478660 - 01/05/06 03:01 PM
Servicing Disclosure Statement Calculations
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Member
Joined: Nov 2005
Posts: 68
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When calculating the % of loans transferred for the servicing disclosure statement, do we also include the construction loans that were sold & paid in full where there was no servicing transfer involved?
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#478661 - 01/05/06 03:16 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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No. BTW, the percentages are no longer required.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. 20551
DIVISION OF CONSUMER AND COMMUNITY AFFAIRS
CA 03-9
September 10, 2003
TO THE OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS SECTIONS:
SUBJECT: Revised Examiner Guidance on Mortgage Loan Servicing Disclosure Statements Required Under the Real Estate Settlement Procedures Act ("RESPA")
In 1990, Congress amended RESPA to include a disclosure that informs borrowers that their loan or the servicing of their loan may be sold (12 USC 2605, Public Law 101-625 section 6, 11/28/1990). In 1996, Congress again amended RESPA to simplify the mortgage servicing disclosure (Public Law 104-208, section 2103(a), September 30, 1996). The 1996 amendment to RESPA eliminated the historical data provisions and the acknowledgement requirement for mortgage servicing transfer notices.
The Department of Housing and Urban Development (HUD) proposed an amendment to Regulation X to implement the 1996 amendments to section 6 of the statute on May 9, 1997 (FR Vol. 62, No. 90). However, HUD never finalized the proposed regulation. Consequently, Regulation X (3500.21(b)) currently requires a detailed notice that includes historical percentages for a three-year period, as well as the applicant's acknowledgement.
HUD addressed the discrepancy between the RESPA statute and Regulation X in the supplementary information to the July 29, 2002 proposed revision of Regulation X (07/29/02, Vol. 67, No. 145, p. 49152) by stating:
The Department plans to finalize the 1997 proposed rule shortly. However, in the meantime, the Section 6 language in the statute may be provided in conjunction with the GFE instead of the language currently indicated in §3500.21 and Appendix MS-1.
Given HUD's stated position on this issue, Board staff has determined that examiners should implement the following guidance when reviewing loans for compliance with section 24 CFR 3500.21(b) of HUD's Regulation X. Effective immediately, examiners should not cite violations of the following sections of RESPA:
Reg. X/CARES Acceptable Cite Description X 21(b)(2) Mortgage servicing transfers - servicing disclosure statement - must have applicant's acknowledgement portion X 21(b)(3)(ii) Mortgage servicing transfers - servicing disclosure statement - must have % of lender's loans assigned, sold, transferred X 21(b)(3)(ii)(A) Mortgage servicing transfer notice - percentage of loans transferred should be for the last 3 years, updated each year by March 31, and calculated according to formula in reg X 21(b)(3)(iii) Mortgage servicing transfer notice should include best estimate of percentage of loans made in upcoming year that will be transferred X 21(b)(3)v) Mortgage servicing transfers - servicing disclosure statement - include written acknowledgement (& signature) of applicant
In addition, violations of the above five sections of Regulation X no longer should be referred to the Board as provided for in CA Letter 01-2 . Beginning on October 1, 2003, these five cites will be disabled on the CARES system.
Keep in mind that Regulation X still retains a mortgage servicing disclosure requirement. Specifically, examiners should determine that borrowers are given the following disclosures (as applicable):
Reg. X/CARES Acceptable Cite Description X 21(b)(1) Mortgage servicing transfers - servicing disclosure statement- must be provided at time of application or within 3 business days X 21(b)(3)(i) Mortgage servicing transfers - servicing disclosure statement - must disclose whether servicing may be assigned, sold or transferred
As a reminder, violations of the above two sections of Regulation X should continue to be cited and referred to the Board as provided for in CA Letter 01-2.
If you have any questions regarding this RESPA matter, they should be directed to the review examiner assigned to your district or to Tracy Anderson at (202) 736-1921.
Sincerely, (signed)
Shawn McNulty Associate Director
CA letters | 2003 Letters
--------------------------------------------------------------------------------
Home | Banking information and regulation Accessibility | Contact us Last update: March 16, 2005
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#478662 - 01/05/06 03:34 PM
Re: Servicing Disclosure Statement Calculations
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Member
Joined: Nov 2005
Posts: 68
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Does anyone have a sample of the revised servicing disclosure statement since we don't have to use the percentage anylonger?
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#478663 - 01/11/06 09:11 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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All you have to do is add a statement to your GFE:
We may assign, sell or transfer the servicing of your loan.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#478664 - 01/11/06 09:47 PM
Re: Servicing Disclosure Statement Calculations
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100 Club
Joined: Oct 2003
Posts: 170
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That's how it's been explained to me as well. The Fed Board's guidance seems to say that we no longer need to give anything for sections #2, #3, or the customer acknowledgement/signature, but we still need to cover section #1
However, the sample disclosure provided in Appendix MS-1 has some introductory paragraphs that explain the customers' rights to receive a notice 15 days before an actual transfer, for complaint resolution, and for legal judgment for damages and costs if the creditor violates RESPA. How does the Fed Board's guidance allow us to stop giving that information?
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#478665 - 01/11/06 10:05 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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Keep in mind Appendix MS-1 is attached to HUD's Regulation X, RESPA which has not been updated to the Real Estate Settlement Procedures Act's amendment.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#478666 - 01/11/06 10:21 PM
Re: Servicing Disclosure Statement Calculations
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100 Club
Joined: Oct 2003
Posts: 170
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That's true. But did the change in the statute say that none of that other information is required anymore or just that we didn't need to give the estimates of the past and future transfer percentages? The guidance from the Fed Board is silent on the issue.
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#478667 - 01/12/06 01:41 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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Real Estate Settlement Procedures Act 2605(a).
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#478668 - 01/12/06 01:57 PM
Re: Servicing Disclosure Statement Calculations
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100 Club
Joined: Oct 2003
Posts: 170
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That's pretty straightforward. Strange when that happens isn't it? Thanks Dan.
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#478670 - 01/18/06 09:13 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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No. 2605(a) does not designate that it is to be given with the GFE.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#478671 - 01/18/06 09:27 PM
Re: Servicing Disclosure Statement Calculations
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Power Poster
Joined: Nov 2000
Posts: 2,701
PA
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Thanks, Dan, that's what I thought, but I was afraid I had missed something somewhere else.
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#478672 - 01/19/06 01:33 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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For those interested I have put together a sample disclosure. The text of the disclosure follows. Feel free to copy and edit as needed. This disclosure is on our letter head.
Servicing Transfer Disclosure
This disclosure is being given in compliance with Section 2605(a) of the Real Estate Settlement Procedures Act (RESPA).
The Peoples State Bank may assign, sell or transfer the servicing of your loan to another servicer any time during the term of the loan.
Please contact us at the above address or telephone number if you have any questions concerning this disclosure.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#478673 - 03/07/06 09:31 PM
Re: Servicing Disclosure Statement Calculations
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Platinum Poster
Joined: Nov 2004
Posts: 650
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Dan;
Who is your regulator. we have OTS and they informed us that the disclosure must be separate and the customer must sign it. They do not have to sign a GFE so they want to see a separate disclosure.
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#478674 - 03/07/06 09:36 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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Your OTS examination team is behind the times. I would respectfully request of them that they run this by the their legal staff in their field or regional office.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#478676 - 05/16/06 12:41 PM
Re: Servicing Disclosure Statement Calculations
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Power Poster
Joined: Oct 2000
Posts: 5,991
Soaring over Georgia
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I have a question on timing. Are the timing requirements from Reg X 3500.21 still applicable for the initial Servicing Transfer Disclosure? It would seem so, because the revised statute still calls for the disclosure at the time of application. If this is true, then how can this be accomplished by putting the statement on the GFE as was advocated earlier in the thread? The GFE can be provided up to 3 business days after application even in the case of in-person applications.
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Jim Bedsole, CRCM, CBA, CFSA, CAFP My posts - my opinions
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#478677 - 05/16/06 12:51 PM
Re: Servicing Disclosure Statement Calculations
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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Jim, I agree that 2605(a) still states the disclosure is required at the time of application. This is why the above disclosure I posted is a separate disclosure and is included in our application packets.
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The opinions expressed are mine and they are not to be taken as legal advice.
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